Despite the storms hitting parts of the UK, the heatwave seems set to continue, which could be bad news for easyJet

The budget airline fell 51p to £13.36 as analysts said the hot weather would discourage people from booking a quick break abroad in search of the sunshine. As a result, HSBC cut its recommendation on the company, which issues an update on Wednesday, from overweight to neutral and its target price from £15 to £14.50. Analyst Andrew Lobbenberg said:

easyJet's fourth quarter profitability depends on the company's ability to maximise revenue from last minute bookings. We think demand for holiday flights will be melting as fast the icecreams on Clacton beach in the current heat wave.

The current heatwave in Northern Europe will be weakening demand for services on beach routes. Google trends cites drops of 15-20% year on year in web searches from the UK for flights to Malaga and Palma this week. On easyJet.com, flights are plentifully available on these trunk routes from Gatwick for under £100 during August, with some weekend flights available for less than £100. While beach flying is only one component of the easyJet network, we particularly admire easyJet's network management in flexing its operations onto beach routes in the summer peak, when business travel demand is weak. If beach demand is weak, the impact on fourth quarter trading will thus be noticeable, notwithstanding the excellent work being undertaken on harvesting revenues from allocated seating and network management.

Meanwhile Carpetright closed 4.5p lower at 677p after the company said soaring temperatures had put people off traipsing to the stores to buy floor coverings. Like-for-like sales at its UK shops fell 1.9% in the 12 weeks to 20 July, after having risen 5.6% in the fourth quarter.

Overall, after a positive start following upbeat comments on the Chinese economy, the FTSE 100 finished 25.73 points lower at 6597.44. A disappointing reading on the Richmond Fed manufacturing index for July, which came in at -11 rather than the expected +9, took the shine off, albeit reinforcing the idea that the US Federal Reserve will not end its bond buying programme in the immediate future.

Miners were lifted by the China news, where the country's premier vowed to keep economic growth above 7%. So Glencore Xstrata led the risers in the FTSE 100, up 13.7p at 282.7p, while Rio Tinto rose 97.5p to £30, Eurasian Natural Resources Corporation climbed 8.2p to 219.3p and Anglo American added 30p to £14.35p.

But Tullow Oil slumped 74p to £10.41 after announcing a dry well in French Guiana.

The company also said a well in Mozambique had found only a small amount of gas. Tullow owns 27% of the French Guiana project, with Northern Petroleum, down 5% at 30.5p, holding a 1.25% stake.

Elsewhere BSkyB dropped 20p to 830p as James Murdoch, deputy chief operating officer of the newly formed 21st Century Fox, reportedly said it had no plans to bid for the satellite business again, although it did not intend to decrease its 39% stake either. News Corporation, before it was demerged into Fox and a newspaper business, bid for BSkyB but was forced to withdraw its interest amid the phone hacking scandal.

But Sage added 6.2p to 359p after the software specialist said it would meet its strategic and financial goals after trading in line with expectations in the past three months despite weakness in Europe.

George O'Connor at Panmure Gordon kept his hold rating, saying:

A typical Sage update – all in line. These are the swan song numbers for outgoing chief financial officer Paul Harrison and his reputation as master of cash creation remains intact – and indeed we reduce our full year net debt forecast. There may well be some reductions to profit consensus given the 'it's not especially getting better' narrative and France gets mentioned for weakness (around 20% of group) – but this was expected...It is clear that in the critical US geography (31% of revenue) Sage is making some progress – and we think that the/any recovery starts there. To reflect the improved cash we increase our target price to 337p (from 318p).

But Credit Suisse was more downbeat. Analyst Charles Brennan put an underpeform rating on the shares and said there was little new information in the statement:

There is no update on the group's cloud progress where the next scheduled update will be the interim results in December.

We continue to be surprised by the divergence of investor views across the sector. SAP recently reported 10% [software] growth and yet investors are debating whether the group is ex-growth. Sage is on track for 3% revenue growth and yet is seen as a resilient cash flow story. We think the cloud risks are more acute at Sage than they are at SAP and despite reporting slower growth, Sage trades on a 3% 2014 PE premium to SAP. We think this looks wrong. Meanwhile, if investors want stable cash flows, why not buy Micro Focus on 17% valuation discount? We continue to think that Sage is likely to be a growth underperformer and that will put pressure on the rating.

Vodafone slipped 1.1p to 192.9p despite Telefonica Deutschland - the third largest mobile operator in Germany - agreeing to buy the fourth largest player E-Plus for around €8bn. Analysts at Killik & Co said:

If the deal gains regulatory approval, the reduction in competitive intensity will be positive news for Vodafone, the number two player. Germany accounts for more than 10% of Vodafone's valuation, and the group recently increased its exposure with the [proposed] acquisition of Kabel Deutschland.

Meanwhile Vodafone chairman Gerard Kleisterlee told the company's annual meeting it would seriously consider any offer for its 45% in US joint venture Verizon Wireless, but there were no new developments.

According to analysts, the chip designer has been replaced by Arm in one of Samsung's new chips, while a slowdown at Apple (which reports results later) would also be bad news for Imagination. Eoin Lambe at Liberum Capital said:

Arm has displaced Imagination for an important GPU design at Samsung LSI [large scale integrated circuits]. Samsung's new Exynos 5 Octa chip relies on Arm's Mali-T628 GPU, while the previous version used an Imagination's GPU. Samsung is a high volume chip vendor and is therefore an important customer. The loss of this socket plus the slow down at Apple (Imagination's largest royalty payer) will drag on Imagination's future royalty revenue.

Meanwhile Arm, which reports on Wednesday, dipped 8p to 898p. On Monday rival Intel said it planned to launch a low-power version of its server processors, which could head off the likes of Arm which are moving into the server market from smartphones and tablets. Intel meanwhile is moving in the other direction, raising competition fears for Arm.

Finally Premier Foods, the company behind Hovis, Mr Kipling and Oxo, finished 5.25p higher at 90.25p. after reporting better than expected half year profits, but many in the City still believe it will need a fundraising at some point.

Premier said underlying trading profits - excluding restructuring charges and interest on its debt - rose 50% to £47.4m, and it said full year figures would be at the top end of market forecasts.. It is currently restructuring its baking business and plans to halve the number of its suppliers. It has also been selling off unwanted assets to cut its borrowings, and help with its pension deficit. Graham Jones at Panmure Gordon issued a sell note, despite the update:

We think the key issue for Premier remains its balance sheet and pension fund liabilities and here we still believe a £200m [or so] equity raise is a rational course of action. As such we think the recent share price rally is over-done and reiterate our sell and 65p target price.